Stocks plunge to two-month low after Marriot bombing<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
Jakarta shares and the rupiah were badly hit by the deadly
\nbomb blast at the JW Marriott Hotel in Central Jakarta in the
\nworst terrorist attack in the capital since the blast at the
\nJakarta Stock Exchange building in 2000.<\/p>\n
The Jakarta stock index plunged on Tuesday to its lowest level
\nin more than two months as frightened investors unloaded shares
\nimmediately after trading resumed in afternoon session. The bomb
\nblast happened at lunch break.<\/p>\n
The index dropped by 3.1 percent to 488.52 from 503.94 in the
\nprevious day.<\/p>\n
In the currency market, the rupiah closed 2.1 percent lower
\nagainst the U.S. dollar at Rp 8,665 from Rp 8,490 on Monday.<\/p>\n
However, some analysts said the pressure on shares and the
\nrupiah would likely be short-lived as investors had already
\ngained experience from last year's Bali bomb blasts, and the fact
\nthat Tuesday incident was not as massive as the Bali tragedy.<\/p>\n
\"It will be a short panic selling. If you meticulously see the
\ntrade record of stocks on Tuesday, you will find that foreign
\ninvestors are still confident about the country's economic
\nprospect,\" said an analyst at a state-owned securities house.<\/p>\n
Foreign-affiliated broker firms such as JP Morgan Securities
\nDBS Vickers Securities and CLSA (Credit Lyonnais Securities Asia)
\nIndonesia helped the Index bounced back from its two-and-a-half
\nmonth low of 479.820 by making late afternoon buying, the analyst
\nsaid.<\/p>\n
JP Morgan, for example, bought around 15 million shares of
\nblue chip state-owned telecommunications company PT
\nTelekomunikasi Indonesia (Telkom) worth Rp 61.8 billion ($7.1
\nmillion) and help avoid the bourse from suffering a further drop.
\nBut Telkom shares closed at Rp 4,125, down from Rp 4,300 on
\nMonday, amid the overall depressed market sentiment.<\/p>\n
DBS Vickers was also seen buying 910,500 shares in blue chip
\ncigarette producer PT Gudang Garam worth about Rp 7.9 billion.
\nNevertheless, Gudang Garam shares ended lower at Rp 8,650 from Rp
\n8,950 in the previous day.<\/p>\n
The analyst explained that at their current prices, many blue
\nchip stocks had become attractively cheap. Bargain hunters might
\nentered the market soon, which could prevent the stock index from
\na sharp drop or might even prompt a mild rebound.<\/p>\n
\"There will be a further weakening but not that worrisome. The
\nmarket will draw experiences from the tragedy when the market
\nfell drastically by 38.99 points to end at 337.47 a day after the
\nBali bombing,\" he said adding that the index would not break the
\n480 level.<\/p>\n
Meanwhile, currency analyst Pardi Kendy from Bank Buana told
\nThe Jakarta Post that the incident proved that there was a
\nserious problem in the country's security conditions, which the
\ngovernment failed to overcome.<\/p>\n
However, he explained that the market's experience from the
\nBali bombing incident would help avoid a widespread panic in the
\ncurrency market.<\/p>\n
\"This is a serious problem, but it is not as huge and
\nexplosive as the Bali bombing. The market can somehow learn from
\ntheir experience again,\" said Pardi adding that the rupiah would
\nlikely to hover at around Rp 8,550 to Rp 8,650 this week.<\/p>\n
He also said that the market was now looking to the government
\nto show concrete actions against terrorist threat such as those
\ntaken after the Bali bombing to help ease the worries.<\/p>\n
The rupiah and the Jakarta stock market have been one of the
\nbest performers in the region during the first half of this year,
\nalthough recently there have been signs of weakening in the two
\namid increasing confidence in the U.S. economy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/stocks-plunge-to-two-month-low-after-marriot-bombing-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}